A rarely-used – but important – False Claims Act (FCA) provision recently turned the typical attorneys’ fees repayment award on its head, when a Mississippi federal judge used the statutory authority to require the whistleblower who filed the “frivolous” qui tam lawsuit to pay nearly $1.1 million to defendants for attorneys’ fees and costs.

Under the FCA, when the government declines to intervene but the whistleblower still continues to litigate, 31 U.S.C. § 3730(d)(4) provides that “the court may award to the defendant its reasonable attorneys’ fees and expenses if the defendant prevails in the action and the court finds that the claim of the person bringing the action was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.” 31 U.S.C. § 3730(d)(4).

While it is common practice for a prevailing whistleblower to rely on the FCA’s fee-shifting provisions to receive reasonable fees, costs and expenses from the defendant in fraud and anti-retaliation FCA cases, the Mississippi outcome serves as a notable example of a scenario when a winning defendant should decide to go on offense in an effort to recover its own potential fees and costs.

In the Northern District of Mississippi case, United States ex rel. Jehl vs. GGNSC Southaven, Case No. 3:19-cv-091-GHD-JMV, the relator brought an action against a long-term care provider, alleging that it employed a nurse practitioner who previously had her Virginia-based multistate license revoked. The relator contended that the defendant received “millions in reimbursement payments” to which it was not entitled, because it violated regulations by employing an unlicensed nurse practitioner.

However, the federal court reviewing the case found that the relator failed to engage in any due diligence to check the accuracy of his allegations. The relator neglected to conduct a follow-up search of a licensing database that would have demonstrated that the nurse practitioner in question had her nursing license reinstated by the time she started her employment with the Mississippi long-term care provider. Senior U.S. District Judge Glen H. Davidson reasoned that the relator “failed to conduct a simple online inquiry of Virginia’s public records which would have informed him that his core allegation and the primary basis for this lawsuit – that [the nurse] lacked a valid multistate license – was demonstrably wrong.”

Because the lawsuit lacked any factual support, the court determined that it was “clearly frivolous” under the FCA. On March 14, 2024, the court issued a decision regarding two motions concerning the defendant’s request for reimbursement for legal fees and expenses incurred in defending the action. Although the court somewhat reduced defense counsel’s rates, it still awarded nearly $1.1 million in legal fees.

The outcome offers a lesson for FCA defendants who believe they are wrongly implicated: if it can be proven that the relator’s allegations are “clearly frivolous” and that the relator made no effort to check the accuracy of his allegations before bringing the qui tam lawsuit, the ability to recover attorneys’ fees under 31 U.S.C. § 3730(d)(4) can be an important tool in the defendant’s strategic toolbox.

If you have any questions regarding False Claims Act investigations, please contact our Enforcement Insider Editors Rosie Dawn Griffin (rgriffin@feldesman.com) and Mindy B. Pava (mpava@feldesman.com) or call 202.466.8960. Be sure to also check out our Enforcement Insider blog to stay up to date on the latest enforcement actions and court decisions of interest to federal grantees.